Spotify’s latest update to its iPhone app has just hit the iTunes store. The popular music streaming service has added several new features to the app but is still likely to frustrate many Premium users.

Spotify launched an iPhone app ahead of those for other leading smartphone platforms during 2009, after establishing itself across Europe initially as a free web-based ad-funded music streaming service.

After adding a Premium, paid-for service Spotify launched the iPhone app to enable Premium users to access their Spotify playlists via the iPhone.

Users and industry commentators were initally surprised to see the app gain approval from Apple as it appeared to compete directly with iTunes. However, the app went live and has proved popular, boosting Premium subscriptions for the service.

The first release of the app did, however, frustrate some subscribers as it used different navigation to the iPhone’s native music player (a track progress bar where the volume slider should be), failed to allow last.fm scrobbling unlike the browser-based app and allowed no sorting of playlists, forcing the user to scroll up and down and ever lengthening list of unordered lists.

The Spotify app did, however, introduce offline playlists so users could download tracks to the iPhone so that they could listen without streaming, although this feature’s usefulness was diminished on the iPhone due the the phone’s restriction on multitasking, thus preventing users from doing anything else whilst listening to Spotify.

The organisation has attempted to address some of these issues in its latest release – in the App Store today – but the latest changes may still frustrate fans of the service. On the upside, last.fm scrobbling is at last enabled, plus there’s the ability to click on Facebook 0r browser links to Spotify tracks and automatically open the app.

However, there is still no method of searching for an album and adding it as a playlist in its own right – instead you must add it to an already existing playlist, meaning that users must constantly revisit the web-based app to tidy up playlist names. [Update: Spotify advises that users can add albums to their own playlists : Click the ‘…’ when in the album view, then ‘Save to playlist…’ and then the + sign to create the new list.]

Spotify has also added a social element to the app by enabling you to share details of your current track via Twitter. Unfortunately, this is done by closing Spotify, stopping the music and opening up Safari where you must log in to Twitter before it presents you with a lengthy Spotify URL.

There are one or two further tweaks to the app including being able to access your iPod tracks from within the app so, on the whole, it’s worth grabbing the upgrade, but it does feel a little ‘two steps forward, one step back’.